The purpose with which the product was conceived is now fading and now focus is put on garnering more and more funds from the investment which has lost its basic plan both in respect of costs and returns for the retiree. So here is a simple take on why the same is occurring:

Incentives to sellers and distributors, an additional burden to be borne by investors: Since the conception of the product several associated costs for the investor in NPS or national pension scheme has increased. There are suggested to be as many as 10 or higher direct and indirect costs and the incentive hike is another in the line up.

Returns to be lesser: For the end investor, these hikes in distribution cost which has a cap of minimum Rs. 20 and maximum Rs. 25000 in a year, will mean deduction from the customer's net returns.

Expense ratio: Higher in case of new offerings in the ETFs so as is the longer perspective of high wealth creation is marred to an extent.

Other better alternatives such as ETFs which track other underlying : As tracking the sector indices is expected to yield a higher return than in case the fund manager responsible for your funds if he happens to go wrong with the plan. Also, the tax break of Rs. 50000 shall not be worth the gain in the long run.

All in all, in today's scenario, NPS are fast losing their much coveted space because of the complexities and cost structure of the instrument.

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